The largest food company in the world by revenue, Switzerland-based Nestlé, was forced to fly down its Chief Executive Officer (CEO) Paul Bulcke to the national capital to manage the crisis over alleged contamination in its fast-selling Maggi noodles. Weeks after the controversy had come to light and various authorities had initiated action against the brand, the company, with annual sales of $100 billion, sent out a statement at 1 a m on Friday, announcing a total recall of the noodles from Indian stores. The public relations machinery was pressed into service at the early hour to inform the media about a press conference by Bulcke at noon.
In fact, the company had swung into urgent action following a meeting between top officials of the Food Safety and Standards Authority of India (FSSAI) and Bulcke on Thursday, when Nestlé perhaps realised the Indian government had made up its mind on the course of action.
At the Friday conference, the Nestlé CEO maintained Maggi was safe but the product was being withdrawn “temporarily’’ from India owing to “unfounded concerns” that had “shaken’’ consumer trust. “What concerns me is how it [the current controversy] is going to impact the trust that Indian people have in Nestlé and Maggi.’’
He added, “In this environment of distrust among consumers and authorities, we decided to withdraw Maggi as a precautionary measure.” Maggi, with estimated annual sales of Rs 2,000 crore in the country, will return to the stores soon, Bulcke assured millions of Indians hooked to the two-minute noodle. “We will do whatever it takes to have Maggi back on shelves soon.”
However, while the widely televised Nestlé conference was on, the country’s food safety regulator put out an order recalling Maggi noodles from all states, saying it was “unsafe and hazardous for human consumption’’. That was not the only face-off between Nestlé and Indian authorities. By early evening, Nestlé India moved Uttarakhand High Court against the hill state government’s 90-day ban on Maggi. The court has given the Uttarakhand government 15 days to reply to Nestlé’s plea. Apart from moving court, the company has sought results of the laboratory tests conducted by states.
Delhi, Gujarat, Tamil Nadu, Jammu and Kashmir and Uttarakhand had earlier banned Maggi after concerns were raised over the presence of lead beyond permissible levels and monosodium glutamate (MSG). In spite of the all-round fury over Maggi’s content, the West Bengal government on Friday gave cleared the brand, saying no traces of material beyond permissible limits were found after samples were tested in five laboratories. In Maharashtra, though the Food and Drug Administration (FDA) said there were no traces of excessive lead in samples collected from Mumbai and Pune, the government banned Maggi on Friday.
Not just in India, the Maggi scare spread internationally as well. Singapore and the UK were among the countries raising a safety alarm. Singapore’s food safety authority said it had taken samples of Maggi noodles made in India for safety tests and also advised importers to stop sale of the product produced in the country. The UK launched an investigation into the issue, too.
FSSAI has ordered Nestlé India to withdraw and recall all the nine approved variants of Maggi instant noodles from across the country. The company has also been told to desist from any further production, processing, import, distribution and sale of Maggi with immediate effect. The regulator show-caused the company to present its case in 15 days, failing which FSSAI might withdraw the “product approval” of the nine variants issued by it in June 2013.
Though FSSAI had said earlier it would take action by next week if contamination was found in samples drawn from at least six states, the regulator was in a hurry to show results. The regulator’s order is based on high lead and MSG content in samples from four states — Uttar Pradesh, Delhi, Gujarat and Tamil Nadu — FSSAI CEO Yudhvir Singh Malik confirmed. On whether the regulator was only gunning for multinationals, Malik said that was not the case, adding it had already decided to widen the scope of the investigation.
The order listed out the ailments that heavy metals such as lead could cause, such as anaemia, paralysis, damage to the brain, kidney and reproductive and immune systems.
It went on to explain the presence of MSG was natural in food products. But Nestlé India mentions “no added MSG” on Maggi packets. “The apparent reason for using such information on the label is driven by an undue commercial advantage/benefit to create an erroneous impression in the minds of consumers regarding the character of the product,” FSSAI said.
However, according to Nestlé India Managing Director Etienne Benet, the company decided to add the message on Maggi packets to clear any “confusion” among consumers. To strengthen its case, the FSSAI order cited the US Food and Drug Administration as saying food with any ingredient containing MSG naturally could neither claim ‘no MSG’ or ‘no added MSG’ nor be classified as “spices and flavouring”.
FSSAI has also alleged Nestlé India of violating the Food Safety and Standards Act, 2006, in relation to Maggie Oats Masala Noodles, as the company had failed to respond on “safety or risk assessment” issues raised by the regulator in February. According to the order, Nestlé India had started selling the product without a “product approval”. Hence, the company has been told to withdraw Maggie Oats Masala Noodle.
FSSAI has directed Nestlé India to submit a compliance report on its orders by Monday. It has also asked the company to submit progress reports on the recall of Maggi noodles daily.
Nestlé India, which gets 30 per cent of its annual revenue from Maggi sales, is likely to bear huge loss due to the recall of Maggi noodles. In the instant-noodles category, the company has about 70 per cent market share.
“We want to cooperate. We will sit with authorities, both local and national, explain and clarify” any air of mistrust, said Bulcke, for whom India has meant just an annual trip till recently, though the CEO has stepped up the frequency of his visits in the last two years or so.
If Maggi is off the shelves for long, it could mean not just loss of revenue but also jobs in the company. A source noted at the sales level, there was no exclusive staff for Maggi, except brand heads and managers in the noodles category. But the production team has a significantly higher number of employees, the source added. As for the hit on revenue, last month, the company could meet just about one-third of its sales target for Maggi noodles since the controversy surfaced, an insider said. Typically, it’s a Rs 200-crore target every month in the category.
[“source – business-standard.com”]